FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

Exhibit 10.2

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (the “Amendment”) is dated July 28, 2005 and is by and between MEDALLION FINANCIAL CORP., a Delaware corporation having an address of 437 Madison Avenue, New York, New York 10022 (the “Borrower”), and STERLING NATIONAL BANK, a national banking association having an address of 650 Fifth Avenue, New York, New York 10019 (the “Bank”).

RECITALS

A. The Borrower and the Bank entered into a Loan and Security Agreement dated April 26, 2004 (the “Loan Agreement”), pursuant to which the Bank has agreed to extend certain credit and make certain loans to the Borrower in an aggregate principal amount not to exceed $15,000,000.

B. The Borrower has requested, and the Bank has agreed to make, certain amendments to the Loan Agreement, all as more fully described herein.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

1. Defined Terms. Except as otherwise indicated herein, all words and terms defined in the Loan Agreement shall have the same meanings when used herein.

2. Extension of Revolving Credit Termination Date. The Revolving Credit Termination Date is hereby extended to June 30, 2006. Accordingly, the definition of the term “Revolving Credit Termination Date” set forth in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:

“Revolving Credit Termination Date” shall mean June 30, 2006.

3. Amendments to Other Loan Documents. Each of the other Loan Documents is hereby amended to the extent necessary to reflect the amendments to the terms of the Loan Agreement effected by this Amendment. Without limiting the generality of the foregoing, each of the other Loan Documents shall secure the Note (as defined below) to the same extent, and with the same effect, as it secured the Prior Note (as defined below). The Borrower shall take or cause to be taken such actions, and shall execute, deliver, file and/or record or cause to be executed, delivered, filed and/or recorded such documents and other instruments, as the Bank shall deem to be necessary or advisable in order to confirm, implement or perfect the amendments to the other Loan Documents effected by this Paragraph 3.

4. No Defenses. The Borrower acknowledges that, as of July 26, 2005, the aggregate outstanding principal balance under the Revolving Credit Loan was $10,700,000. The Borrower acknowledges and agrees that, as of the date hereof, it has no offsets, counterclaims or

defenses of any nature whatsoever to its Obligations to the Bank under the Loan Agreement or any of the other Loan Documents, and hereby expressly waives and releases any and all claims against the Bank which exist on the date hereof with respect thereto.

5. Substitute Note. Concurrently herewith, the Borrower is executing and delivering to the Bank a Substitute Revolving Credit Note in the maximum principal amount of $15,000,000 (the “Note”) in substitution for, but not in repayment of, the Revolving Credit Note dated April 26, 2004 in the maximum principal amount of $15,000,000 previously issued by the Borrower to the Bank (the “Prior Note”). The execution and delivery by the Borrower of the Note pursuant to the provisions hereof shall not constitute a refinancing, repayment, accord and satisfaction or novation of the Prior Note or the indebtedness evidenced thereby.

6. Representations and Warranties. In order to induce the Bank to enter into this Amendment and amend the Loan Agreement as provided herein, the Borrower hereby represents and warrants to the Bank that:

(a) All of the representations and warranties of the Borrower set forth in the Loan Agreement are true, complete and correct in all material respects on and as of the date hereof with the same force and effect as if made on and as of the date hereof and as if set forth at length herein.

(b) After giving effect to this Amendment, no Event of Default presently exists and is continuing on and as of the date hereof.

(c) Since the date of the Borrower’s most recent financial statements delivered to the Bank, the Borrower has not experienced a material adverse effect in its business, operations or financial condition.

(d) The Borrower has full power and authority to execute, deliver and perform any action or step which may be necessary to carry out the terms of this Amendment and this Amendment has been duly executed and delivered by the Borrower and is the legal, valid and binding obligation of the Borrower enforceable in accordance with its terms, subject to any applicable bankruptcy, insolvency, general equity principles or other similar laws affecting the enforcement of creditors’ rights generally.

(e) The execution, delivery and performance of this Amendment will not (i) violate any provision of any existing law, statute, rule, regulation or ordinance, (ii) conflict with, result in a breach of, or constitute a default under (A) the certificate of incorporation or by-laws of the Borrower, (B) any order, judgment, award or decree of any court, governmental authority, bureau or agency, or (C) any mortgage, indenture, lease, contract or other material agreement or undertaking to which the Borrower is a party or by which the Borrower or any of its properties or assets may be bound, or (iii) result in the creation or imposition of any lien or other encumbrance upon or with respect to any property or asset now owned or hereafter acquired by the Borrower, other than liens in favor of the Bank, except, in the case of clauses (ii) and (iii) above, for any deviation from the foregoing which would not reasonably be expected to have a Material Adverse Effect.

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(f) No consent, license, permit, approval or authorization of, exemption by, notice to, report to, or registration, filing or declaration with any person is required in connection with the execution, delivery and performance by the Borrower of this Amendment or the validity thereof or the transactions contemplated thereby, other than (i) filing or recordation of financing statements and like documents in connection with the Liens granted in favor of the Bank, (ii) those consents, if they were not obtained or made, which would not reasonably be expected to have a Material Adverse Effect and (iii) filing which the Borrower may be obligated to make with the Securities and Exchange Commission.

7. Bank Costs. The Borrower shall reimburse the Bank on demand for all costs, including reasonable legal fees and expenses and recording fees, incurred by the Bank in connection with this Amendment and the transactions referenced herein. If payment of such costs is not made within ten days of the Bank’s demand therefor, the Bank may, and the Borrower irrevocably authorizes the Bank to, charge the Borrower’s account with the Bank or make an Advance under the Revolving Credit Loan in order to satisfy such obligation of the Borrower.

8. Counterparts. This Amendment may be signed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument.

9. No Change. Except as expressly set forth herein, all of the terms and provisions of the Loan Agreement shall continue in full force and effect.

10. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the date set forth on the first page hereof.

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